Singaporeans have traditionally preferred home ownership, as the government used to tell our parents and grandparents that one of the best things about living here was that they could own their own home. However, the younger generation is increasingly mobile, and many don’t see themselves living in Singapore their entire lives. As such, whether we should rent or own a home has become an important question.
Here are 5 factors to consider that will help you decide whether you fall in the buying or the renting category
1. Evaluate your savings
You should buy a house if you have enough and more after paying the down payment. Remember, once you invest in a house and start to live in it, the savings you used for the down payment will stop generating income. Say goodbye to your CPF Ordinary Account if you used it to finance the purchase.
You should rent a house if you have put aside only enough to keep yourself secure. Paying for the house is only the beginning of the story; there are constant upkeep bills, maintenance bills, and taxes that you will begin to feel burdened by. Renting may be a little more in terms of the monthly amount you have to cough up, but at least you won’t have the added burden of that huge dent in your savings. Eventually, renting turns out to be a lighter financial commitment.
2. Figure out your priorities
You should buy a house if you are the type who is extremely particular about your living space. Go ahead and bell the cat! You will have complete control over the interiors and the design of your house, and you can customize your property any way you like. An added benefit is the peace of mind that comes along with a property that you own.
You should rent a house if factors like being close to your workplace or your children’s school are a priority. Renting is the answer for you in such a scenario. After all, not many fancy an hour-long daily commute from their house to work. Renters also have the choice to move out of a locality that they are not comfortable in, that isn’t close to their new job, or simply because they feel the need to upgrade.
3. List your life goals
You should buy a house if buying a house – owning that patch of land – is on top of your list of life goals. Remember, it will probably be the only item on your list you will be able to check, for a very long time. Buying a house in Singapore is not the most achievable of goals, and don’t we know that!
You should rent a house if you have multiple items on your life goals list. They could be travelling, retiring early, taking a break from work, pursuing some really expensive hobby or working in another country. Having fewer maintenance obligations and the flexibility to move to a cheaper/small home as and when required will help add to your goals-list kitty.
4. Assess your investments
You should buy a house if you are looking at making a long-term investment. Property is marginally more affordable today, so it is a better time to buy. Organise your investments folder and figure out whether you can afford to sink a huge sum of money as down payment and then monthly instalments for the property.
All this money is going to stay dormant for a very long time, and the only time it will work for you is as resale profit when you sell the property. This is especially true considering the current lull in Singapore’s property market that could be quite some time from now.
You should rent a house if you wish to use the money in your piggy bank for investments that will mature earlier. Liquidity always comes in handy – you may need to fund your children’s education, feel like upping your standard of living, or even start a business; and the income from short-term investments helps you in such situations.
5. Look at the larger picture
You should buy a house if you wish to provide for someone after you are gone. There is no inheritance tax in Singapore, which makes inheriting property a rather convenient and cheap deal. So if there is family – a spouse and children that you wish should inherit the property, then buying is the way to go. But keep in mind that most HDB flats and some condos are on a 99-year lease only.
You should rent a house if you intend to be a short-term resident in high-end properties. If it is private condos or executive flats that your lifestyle demands, then renting is the way to go. It may be a slightly more expensive deal on a monthly basis, but removing that down payment lump sum from the equation eventually makes it a better choice. The difference between the monthly rent and monthly mortgage for high-end properties is very little.